August 13, 2019 Headlines

Treasury prices were higher overnight on Hong Kong concerns (departing flights cancelled amid protests) and weaker German data, but prices have retreated to slightly lower on the day on what appears to be a bit of rally fatigue. The July CPI report was just released, and consumer price growth was higher than expected, particularly for core inflation. CPI excluding food and energy rose 0.3% m/m (0.2% expected), and on a year-over-year basis, core CPI was up 2.2% in July versus expectations for the metric to remain unchanged at 2.1%. Small business optimism was also better than expected in July, with the NFIB index rising 1.4 points to 104.7 (104.0 expected), with 7 of the survey’s 10 components posting gains versus the prior month.

Despite decent domestic economic data of late, the word “recession” is being repeatedly dropped by media and street analysts, which naturally sparks questions of how that weighs on sentiment and consumer behavior. The Fed has a challenging decision in September and beyond. There are many bearish signals in the global financial markets (gold & other commodities, equities, etc.) in response to multiple economic headwinds, most notably U.S./China trade tensions. The markets are expecting a strong response from the Fed in September, with a 25% probability of a 50 bps rate cut currently priced in (75% probability of a 25 bps cut). Will the Fed actually cut rates and initiate another round of quantitative easing in the near future with core inflation actually trending higher? Fed leaders clearly have a lot of external pressure to act, but that’s not exactly a new phenomenon (except for the overt pressure from the White House).

Jason Haley
Managing Director, Investment Management Group

8/13/2019NFIB Small Business Optimism104104.7103.3
8/13/2019CPI MoM0.30%0.30%0.10%
8/13/2019CPI Ex Food and Energy MoM0.20%0.30%0.30%
8/13/2019CPI YoY1.70%1.80%1.60%
8/13/2019CPI Ex Food and Energy YoY2.10%2.20%2.10%
8/13/2019CPI Core Index SA263.3263.57262.8
8/13/2019CPI Index NSA256.44256.57256.14
8/13/2019Real Avg Hourly Earning YoY1.30%1.50%
8/13/2019Real Avg Weekly Earnings YoY0.80%1.20%
8/13/2019Mortgage Delinquencies4.42%
8/13/2019MBA Mortgage Foreclosures0.92%
8/14/2019MBA Mortgage Applications5.30%
8/14/2019Import Price Index MoM-0.10%-0.90%
8/14/2019Import Price Index ex Petroleum MoM-0.10%-0.40%
8/14/2019Import Price Index YoY-2.00%-2.00%
8/14/2019Export Price Index MoM-0.10%-0.70%
8/14/2019Export Price Index YoY-1.60%
8/15/2019Empire Manufacturing24.3
8/15/2019Nonfarm Productivity1.40%3.40%
8/15/2019Unit Labor Costs1.90%-1.60%
8/15/2019Philadelphia Fed Business Outlook9.321.8
8/15/2019Retail Sales Advance MoM0.30%0.40%
8/15/2019Retail Sales Ex Auto and Gas0.40%0.70%
8/15/2019Retail Sales Ex Auto MoM0.40%0.40%
8/15/2019Initial Jobless Claims212k209k
8/15/2019Retail Sales Control Group0.40%0.70%
8/15/2019Continuing Claims1685k1684k
8/15/2019Industrial Production MoM0.10%0.00%
8/15/2019Manufacturing (SIC) Production-0.30%0.40%
8/15/2019Capacity Utilization77.80%77.90%
8/15/2019Bloomberg Consumer Comfort62.9
8/15/2019NAHB Housing Market Index6565
8/15/2019Business Inventories0.10%0.30%
8/15/2019Net Long-term TIC Flows$3.5b
8/15/2019Total Net TIC Flows$32.9b
8/16/2019Housing Starts1257k1253k
8/16/2019Housing Starts MoM0.30%-0.90%
8/16/2019Building Permits1270k1220k1232k
8/16/2019Building Permits MoM3.10%-6.10%-5.20%
8/16/2019U. of Mich. Sentiment9798.4
8/16/2019U. of Mich. Current Conditions110.7
8/16/2019U. of Mich. Expectations90.5
8/16/2019U. of Mich. 1 Yr Inflation2.60%
8/16/2019U. of Mich. 5-10 Yr Inflation2.50%








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